Dominican Republic, among Latin American countries whose economy is better prepared for 2022

The outlook, however, may vary depending on uneven progress in vaccination processes and the ability of countries to reverse the structural problems behind the low growth trajectory they exhibited before the pandemic.

Santo Domingo.- As 2020 was so hard for the world’s economies due to the effects of the covid-19 pandemic, the growth rates of this year about to end are deceptive.

The reason is that as the current Gross Domestic Product (GDP) is measured concerning the previous year, it seems at first glance that Latin America took a spectacular leap.

The Treasury affirms that measures will guarantee debt sustainability and macroeconomic stability.

But the truth is that it is a “rebound effect” because the basis of comparison is very low. So then, looking towards the following year, the projections of the international organizations give a picture a little more “realistic” of how the different countries are evolving.

If it is exclusively about economic growth, the economies with the best prospects for next year are Panama, the Dominican Republic, El Salvador, and Peru, according to the latest forecasts from the Economic Commission for Latin America (ECLAC).

The following table shows the list of countries included in the agency’s studies.

Prospects, however, may vary depending on “uneven progress in vaccination processes and the ability of countries to reverse the structural problems behind the low growth trajectory they exhibited before the pandemic,” the agency says in its “Economic Study of Latin America and the Caribbean” published in October.

Inflation

Most governments have tried to counteract the inflationary wave by raising interest rates, an issue that also affects consumers because credit becomes more expensive.

In part, rising inflation has been driven by increasing food prices, wrote Maximiliano Appendino, an economist in the Regional Studies Division of the Western Hemisphere Department of the International Monetary Fund, IMF.

There is a lot of uncertainty in the environment in relation to the prices of raw materials, bottlenecks in supply chains, and the increase in maritime transport costs, in addition to the possibility that new variants will appear that aggravate the covid pandemic -19.

On the other hand, Appendino added, the region needs to balance an uncertain inflation outlook with employment, which “is still substantially below pre-pandemic levels.”

Rate risk

The best rating is Aaa on a decreasing scale, and the lowest is C. According to Moody’s, the following list ranks countries from best rated to worst rated.

Low credit risk

Chile (A1)

Moderate credit risk

Mexico (Baa1)

Peru (Baa1)

Colombia (Baa2)

Panama (Baa2)

Uruguay (Baa2)

Questionable credit quality 

Paraguay (Ba1)

Guatemala (Ba1)

Brazil (Ba2)

Dom. Rep. (Ba3)

Honduras (B1)

Costa Rica (B2)

Bolivia (B2)

Nicaragua (B3)

El Salvador (Caa1)

Ecuador (Caa3)

Argentina (Ca)

Cuba (Ca)

Venezuela (C)

Source: Moody’s (December, 2021).